CVS and Express Scripts Sue to Overturn Arkansas Law Banning PBM Ownership of Pharmacies

By Diana Novak Jones

CHICAGO (The News Pulse)—On Thursday, CVS and Express Scripts initiated legal action aimed at nullifying an Arkansas state statute scheduled to take effect in the coming year. This legislation intends to prohibit pharmacy benefit managers from owning pharmacies.

The legislation imposes an unconstitutional limitation on interstate trade by adversely affecting out-of-state entities such as Express Scripts from St. Louis and CVS originating from Rhode Island, according to distinct legal actions submitted to the federal courthouse in Little Rock by these firms.

Express and CVS, which are among the nation's largest pharmacy benefit managers, both seek a declaration that the law is unconstitutional and an order barring its enforcement.

Sam Dubke, a representative for Arkansas Governor Sarah Huckabee Sanders, a Republican who enacted the legislation in April, stated in an announcement, “These major pharmaceutical intermediaries are solely challenging Arkansas in court because they fear that other states might follow Governor Sanders’ lead in advocating for better patient accessibility and more cost-effective medications.”

The lawsuits name the executive director and members of the Arkansas State Board of Pharmacy, which regulates the state's pharmacies, as defendants.

Express Scripts, part of the Cigna Group, stated in an announcement that the new legislation may prevent them from delivering medications via their mail-order pharmacy service to numerous residents of Arkansas.

"While Arkansas lawmakers assert that this legislation aims to reduce drug costs and improve medication accessibility, it will have precisely the contrary effect," stated Andrea Nelson, who serves as Cigna's top lawyer.

CVS, which operates 23 pharmacies in Arkansas, said it is exploring all possible options to keep them open, including the lawsuit.

Pharmacy benefit managers act as middlemen, negotiating the cost of prescription drugs with pharmaceutical companies on behalf of employers and health insurance providers. Additionally, they frequently oversee pharmacy networks and run mail-order pharmacy services.

The new Arkansas law, scheduled to take effect in January, prohibits pharmacy benefit managers (PBMs) from obtaining licenses for dispensing prescription drugs and nullifies their current licenses as per the legislative text.

The legislation aims to reduce anticompetitive practices carried out by PBMs, as explained by the governor’s office. These entities determine the pricing for medications dispensed via their networks of pharmacies.

PBMs' business practices have drawn increasing scrutiny in recent years from U.S. lawmakers looking to lower drug prices, state attorneys general and from the Federal Trade Commission, which accused the three largest PBMs of driving up the cost of insulin drugs.

Michigan Attorney General Dana Nessel, a Democrat, sued Express Scripts and another PBM, Prime Therapeutics, last month over claims they conspired to reduce reimbursement rates for independent pharmacies. That litigation is ongoing, court records show.

Representatives for the PBMs did not immediately respond to requests for comment about the Michigan allegations.

(Additional reporting by Amina Niasse in New York; Editing by Leigh Jones, Bill Berkrot, and Sonali Paul)